occurrences
In 2023, the company achieved operating income of 4.05 billion yuan (-16.2% YoY) and net profit to mother of 60 million yuan (-53.9% YoY).
Key points of investment
The 2023 results were under pressure. The 2023 Q4 performance growth rate was corrected to achieve revenue of 970 million yuan (-2.7% YoY), net profit to mother of 0.3 billion yuan (+588.4% YoY), and the performance growth rate was corrected.
By business, cheese/liquid milk/trade achieved revenue of 31.4/3.3/570 million yuan respectively in 2023, or -18.9%/-4.3%/-5.4% year-on-year. The company's large single products, such as cheese sticks, are biased towards snack attributes and are greatly affected by the weak C-side consumption environment.
Profitability is under pressure, and efficiency in the use of expenses is improving
2023 gross profit margin 29.2% (YoY -4.9pct), net profit margin 2.0% (YoY -1.6pct). The decline in gross margin was affected by multiple factors such as falling short of expectations in product sales and rising raw materials. 2023 sales expense ratio 23.2% (YoY -2.1pct), management expense ratio 3.7% (YoY -1.4pct), R&D expense ratio 1.1% (YoY +0.1pct), financial expense ratio 0.6% (YoY +1.0pct). The decline in the sales expense ratio reflects the adjustment of the company's advertising and marketing strategy, and the efficiency of the use of sales expenses continues to improve.
2023 Q4 gross profit margin 25.0% (-8.3pct year over year), net profit margin 3.0% (+2.8pct year over year). In Q4 2023, the sales expense ratio was 21.1% (-9.9pct year on year), and the management expense ratio was -2.6% (-2.1pct year on year). The cost side was actively controlled to promote profit side improvement in the fourth quarter.
Revenue from the catering industry is rising, and C-side consumption still needs to pick up
Category side: In recent years, the company has continued to enrich its product matrix for multi-stage age groups. Expand the consumer base through products such as “mousse cheese cups”; products such as “mascarpone cheese” have further leapt from the snack category to the catering and baking industry. In 2023, the ready-to-eat nutrition series/household table/ catering industry series achieved revenue of 1,90/3.5/890 million yuan respectively, or -23.9%/-36.1%/+7.6% compared with the same period last year.
Profit forecasting and valuation
The profit forecast was lowered to take into account lower than expected results in '23 and the uncertainty of demand in '24. The company's revenue for 2024-2026 is estimated to be 44.8, 49.0 billion yuan, and 5.39 billion yuan, respectively; net profit to mother is 1.52, 1.83, and 227 million yuan, respectively; considering that the Q4 performance growth rate in 2023 has been corrected and both revenue and profitability are expected to increase in 2024, the purchase rating will be maintained.
Risk warning
Risk of fluctuations in the raw material market; sales fall short of expectations; weak consumption; increased competition; penetration rate of other cheese products falls short of expectations; new product performance falls short of expectations.